After several years of recovery for bad "real estate" investments (including some rotten luck), I now need to consider protection from taxes. My only tax deduction is my mortgage which will still have me paying around 14-16K in taxes. My advisor is talking about tax credits from low income housing investments. It looks good on paper, but I don't know anyone that has done this before. Does anyone out there have any insights into this protection; pros; cons, etc. I'm a little nervous because it ties up a lot of money for many years.
Thanks for any help.

chrisanna Date: 1/13/99 1:49 AM Number: 8326

I now need to consider protection from taxes. ... It looks good on paper ... anyone out there have any sights

Don't forget that the goal is not to minimize taxes. The goal is to maximize wealth. Taxes are an important consideration, but between investment choices of:

A. Make $2000, pay $1000 in taxes.
B. Make $1600, pay $700 in taxes.

You should go for the higher taxes. Make sure this is not a "Plan B."

[[After several years of recovery for bad "real estate" investments (including some
rotten luck), I now need to consider protection from taxes.]]

Fine...just don't let the tax tail wag the dog.

[[ My only tax
deduction is my mortgage which will still have me paying around 14-16K in
taxes. My advisor is talking about tax credits from low income housing
investments. It looks good on paper, but I don't know anyone that has done this
before. Does anyone out there have any insights into this protection; pros; cons,
etc. I'm a little nervous because it ties up a lot of money for many years.]]

I have had a few clients that have been "sold" these "tax credit" investments. Of about 4 clients that invested, only one still has a good feeling about the deal...and only a good feeling...not a great feeling.

The other three have blow away to the winds, the initial cash investment was lost, as were the tax credits. And you'll not find too many "new" programs in the low income housing credit area, since the Congress keeps threatening to axe the credit all together. They have found that the low income housing attached to the credit just doesn't work like they thought it would. And they continue to make noises to axe the credit, and would most likely NOT grandfather anybody who has already gotten into those tax shelter problems.

I personally don't care for 'em, and would use my investment money to find a good stock. But that's just me.

TMF Taxes
Roy

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[[Don't forget that the goal is not to minimize taxes. The goal is to maximize
wealth. ]]

Well put, William....well put. I couldn't agree more.

TMF Taxes
Roy